In 2014, millions of previously uninsured Americans gained health insurance coverage through the Affordable Care Act’s (ACA) Medicaid expansion and financial assistance available through the health insurance marketplace.1 These programs, combined with Michigan’s unemployment rate dipping to its lowest level since 2007, contributed to Michigan’s significant decrease in the number of uninsured residents in 2014.2 This brief identifies which groups experienced the largest changes in health insurance coverage in Michigan in 2014. It also analyzes the ACA’s individual mandate and the possible penalty amounts Michigan’s remaining uninsured may face.

Key findings include:

The share of Michigan residents without health insurance dropped from
11 percent in 2013 to 8.5 percent in 2014 as the ACA’s coverage expansion
provisions took effect.

All age groups experienced declines in the number of uninsured, but the
declines were most prominent for young adults under age 35.

Uninsured rates fell for many subpopulations in 2014, yet sharp disparities
remain by race, ethnicity, and income. Hispanic individuals remain more than
twice as likely to be uninsured as white individuals.

Certain geographic regions in Michigan experienced large coverage gains in
2014, yet many rural areas and areas within Detroit continue to have high rates
of uninsured.

The individual mandate penalty is likely to affect as much as 60 percent of the
uninsured in Michigan, and the average annual penalty amounts are estimated
to increase from $126 in 2014 to $446 in 2016.

The data source for this issue brief is the U.S. Census Bureau’s American Community Survey (ACS) made available through the Minnesota Population Center.3 The ACS collects information from approximately 3.5 million addresses each year, and since 2008, has included questions on the health insurance coverage status of household members.4 The ACS asks point-in-time questions on health insurance coverage, and the survey is administered throughout the calendar year.

Therefore, ACS statistics on population health insurance coverage represent the average daily experience in a given year. Due to this survey design and the April 1, 2014, launch of the Healthy Michigan Plan (HMP), health insurance coverage gains in Michigan are likely understated for 2014. A considerable number of ACS first quarter respondents likely became HMP eligible after April 1, so the ACS is likely to overestimate Michigan’s uninsured population in 2014 compared to other surveys.

Historically, the national uninsured rate has exceeded Michigan’s rate, but both have declined since 2010, primarily due to an improving economy. However, both rates experienced a much sharper decrease in 2014 compared to previous years. Figure 1 The share of Michigan residents without health insurance dropped from 11.0 percent in 2013 to 8.5 percent in 2014 as the ACA’s coverage expansion provisions took effect.

Nearly all subpopulations in Michigan experienced a substantial decrease in their uninsured rate in 2014, but coverage gains were uneven. Many groups that had above-average uninsured rates prior to the ACA coverage expansion continued to relatively higher rates in 2014, so large relative disparities in health insurance coverage continued.

Uninsured by Age

From 2013 to 2014, every age group in Michigan experienced a statistically significant decline in its
uninsured rate. Figure 2 The largest decreases occurred for adults from age 18 to 25 and age 26 to 34. Both cohorts experienced a 5 percentage point decrease in their uninsured rate in 2014. In addition, fewer children were uninsured in
2014, even though a limited number of children, compared to adults, gained new access to financial assistance for health insurance coverage under the ACA. Outreach and enrollment efforts focused on uninsured adults that were newly eligible for coverage may have also resulted in some children getting enrolled as well.

Uninsured by Sex

Before the ACA coverage expansion, men in Michigan were more likely to be uninsured (12.2 percent) than women (9.9 percent). Figure 3 In 2014, both men and women experienced significant decreases in their uninsured rates, but men continued to be more likely to be uninsured (9.6 percent) than women (7.2 percent). In addition, the difference in uninsured rates by sex remained virtually unchanged from 2013 to 2014.

Uninsured by Race/Ethnicity

Prior to the ACA coverage expansion in 2014, Michigan had substantial variation in uninsured rates across racial and ethnic groups. In 2013, Hispanic individuals in Michigan were more than twice as likely to be uninsured as white individuals. Figure 4 In 2014, the uninsured rates for nearly all racial and ethnic groups decreased in Michigan, with the exception of the Asian population, which experienced a small but statistically insignificant decrease. Appendix Figure 1 The uninsured rates for African Americans and Hispanic individuals fell by 5.3 and 3.7 percentage points, respectively. However, Hispanic individuals continued to be more than twice as likely to be uninsured as whites in 2014.

Uninsured by Income Level

Uninsured rates also varied considerably by income level in Michigan in 2013. One out of five residents below 138 percent of the federal poverty level (FPL) was uninsured in 2013, and this income group comprised 58 percent of Michigan’s uninsured population. Figure 5 Uninsured rates decreased for all income groups in 2014, with the largest decreases occurring for those below 138 percent FPL, many of whom became eligible for the Healthy Michigan Plan on April 1, 2014. The decline in the uninsured rate for income groups between 138 percent and 400 percent FPL could be due to the availability of tax credits to help purchase private coverage through the health insurance marketplace. Higher income residents above 400 percent FPL also experienced a modest decrease in their uninsured rate, possibly due to an improving labor market.

There was considerable geographic variation in Michigan’s uninsured before the ACA coverage expansion. In 2013, southwest Detroit (located in Wayne County) had the highest uninsured rate for non-elderly residents (age 0-64) at 27.1 percent, and the lowest rate was in the Bloomfield and Birmingham area (Oakland County) at 5.0 percent. Appendix Figure 2

Many areas across Michigan experienced considerable gains in health insurance coverage in 2014. For example, the uninsured rate in south central and southeast Detroit dropped from 21.6 percent to 12.1 percent from 2013 to 2014. However, some areas experienced statistically insignificant changes in their uninsured rate in 2014. Appendix Figure 2 Michigan still experienced geographic variation in uninsured rates in 2014. The northeast Lower Peninsula, Grand Rapids, and areas within Detroit each had uninsured rates over 15 percent. In Eaton and Clinton counties and areas of Ottawa, Kent, Wayne and Oakland counties, uninsured rates were below 6 percent.5Figure 6

Along with the ACA coverage expansion, 2014 marked the first year of the law’s shared responsibility payment (individual mandate) for those who remained uninsured. The payment amount started relatively small—the greater of $95 per adult or 1 percent of income beyond the tax filing threshold—but increases substantially in 2015 and 2016. Figure 7 Uninsured residents may be exempted from the individual mandate if they were uninsured for less than 3 months, available coverage was unaffordable, income was below the tax filing threshold, or if they met another exemption from the mandate 6

Based on analysis of Michigan’s remaining uninsured population in 2014, about 60 percent of the uninsured likely faced an individual mandate penalty payment, with the remaining share being eligible for an exemption from the mandate. The average annual payment for the uninsured could have been as high as $126.7Figure 8 With a minimum penalty of $95 per adult in 2014, more than 30 percent of the uninsured would have faced a penalty amount of more than $100 per person.

For 2015 and 2016, the average penalty amount for the remaining uninsured would increase to $270 and $446, respectively. By 2016, over 49 percent of the uninsured could face a penalty of more than $600, if the average characteristics and income levels of the uninsured population remain consistent with 2014.8 However, many uninsured residents who are subject to the penalty are eligible for financial assistance under the ACA, and some could even obtain marketplace coverage in 2016 for less than the cost of the individual mandate penalty.9

With the ACA’s coverage expansion and decreasing unemployment in 2014, Michigan experienced a substantial decrease in the size of its uninsured population. While this marked a sharp decrease from previous years, coverage gains were uneven both geographically and across subpopulations, and disparities remained. However, due to continued health insurance outreach and enrollment activities and the increasing magnitude of individual mandate penalties, the size of the uninsured population is expected to fall further in future years. How additional coverage gains are achieved and how they affect different groups is worthy of future examination.

Michigan’s unemployment rate decreased from 8.9 percent in 2013 to 7.3 percent in 2014, according to the Bureau of Labor Statistics – Local Area Unemployment Statistics. http://www.bls.gov/lau/ (accessed 1/22/2016).

Figure 6 and Appendix Figure 2 display geographic variation using Public Use Microdata Areas (PUMAs). PUMAs are geographic statistical areas established by the U.S. Census Bureau that are built on census tracts and counties and contain at least 100,000 people.

Estimated penalty payments are for the maximum likely penalty amount. In this analysis, the only penalty exemption we could reliably impute was for those with incomes below the tax filing threshold. Other coverage, affordability, and hardship-based exemptions were not imputed. We also assumed that the uninsured remained without qualifying coverage for the entire year, but penalty payments can be pro-rated for uninsured months.

If the average income levels of the remaining uninsured increased significantly from 2014 levels, the average individual mandate penalties would increase as well.